Buying time

Despite the recent spate of good economic news, David Nitzsche, vp-- Supply Management for AmeriQuest Business Services, cautions fleet owners that the long-term outlook is “still hazy.”

Therefore, he recommends that “the right thing for a fleet manager to do now is to maintain a ‘world view’ of current economic conditions and trends.

“Once all the factors are examined,” writes Nitzsche in a recent blog post, “we recommend making conservative ‘timed purchasing’ decisions, based on a good or bad economy.” He also suggests that staying “current with a constantly changing purchasing landscape” should be the goal.

Nitzsche advises studying how unemployment is trending as “high unemployment leads to a reduction in manufacturing, so the fleet owner may need to acquire capital equipment now to guarantee delivery. And when interest rates rise, as they were just predicted to do, lock in prevailing lower rates.

“Purchasing experts in the transportation industry should always be concerned about the prices of raw materials, including rubber, steel, copper and oil,” he continues. “Whenever there is a dramatic jump in prices, a shortage may be coming. Pay attention to the distribution channels through which you receive your supplies. Make sure the distributor is fully supported by the manufacturers they represent. Local dealers likewise should have influence with their suppliers so that you can get the equipment you need in a timely manner.”

Nitzsche also recommends that “it’s a good idea to be open to outsourcing supply management, maybe for the first time. There are service providers that undoubtedly have better leverage buying in bulk and can secure the lowest prices from respected manufacturers. They also have established relationships with many suppliers so preferential pricing structures have already been negotiated. Taking this approach always saves on labor costs, including yours as well as the necessary administrative support that’s needed.”

In addition, he advises that “one of the most important steps purchasing professionals can take is to develop a collaborative relationship with suppliers… Let your suppliers be a conduit of valuable market information that will help you in decision-making. And create a tiered base of suppliers so that if one source is unable to deliver a product, another is standing by to assist.”